FSA fines financial firm £700,000 for lacking controls

A leading UK firm advising high net worth clients about pension switching and structured product investments was fined £700,000 by the Financial Services Authority for lacking controls to prevent giving clients unsuitable advice.

RSM Tenon Financial Services Limited was found to have broken FSA rules between November 2007 and August 2008 relating to advice about Lehman Brothers structured investment products.

The FSA also criticised the firm for failing to put effective risk management structures in place to stop unsuitable sales by advisers dealing with pension switching.

As a result of the FSA ruling Tenon will conduct two reviews supervised by the FSA and an independent watchdog:

• A check of pension switching business between April 6, 2006 and December 1, 2009, to assess the suitability of recommendations made to customers, and if necessary, the firm will implement a customer redress programme.
• A review of all Lehman-backed structure products sales between November 1, 2007 and December 1, 2009, and instruct a skilled person to review its current sales and compliance processes relating to the sale of all investment products, assessing their appropriateness and the suitability of recommendations made to customer.

According to the firm’s web site RSM Tenon is regarded as one of the most progressive and entrepreneurial professional services firms in the UK.

Tenon is the UK’s seventh largest accounting firm with a fee income of £250 million, employing nearly 3,000 people in over 50 offices across the UK.

RSM International is the sixth largest global accounting network with over 730 offices in more than 70 countries, and employing more than 30,000 people worldwide.

Announcing the action against Tenon, the FSA said that financial firms must give compliant advice to clients and that the FSA would step in and enforce consumer rights where appropriate.

Although QROPS transfers were not mentioned by the FSA, the notable date for the start of the pension review is A-Day for pensions, when HM Revenue and Customs first established QROPS.